Iowa agrees to $103 million payment to Medicaid insurance companies

Managed care organizations to continue in state program

Jerry Foxhoven, director of the Iowa Department of Human Services addresses members of the council at a meeting of the Council on Human Services at the Hoover State Office Building in Des Moines in June. Department of Human Services Director Mike Randol spoke about the cost discrepancies in DHS’s reporting of the state’s Medicaid managed care plans. (Rebecca F. Miller/The Gazette)Iowa Medicaid director Michael Randol during an interview in the Hoover Office Building in Des Moines, Iowa, on Monday, Jan. 8, 2018. (Jim Slosiarek/The Gazette)

The state of Iowa has agreed to a $102.9 million increase in Medicaid funding to two private insurance companies providing Medicaid coverage for more than 600,000 Iowans for fiscal year 2019.

That is a 7.5 percent increase in the state payments from the previous year, state officials announced Friday.

Amerigroup of Iowa and UnitedHealthcare Plan of the River Valley have signed contracts to continue as managed-care organizations within the $5 billion Medicaid program, the Iowa Department of Human Services announced.

The contract states the insurance companies will receive a 8.4 percent overall increase in payments — which includes state and federal funding — from the past fiscal year, totaling up to $344.2 million.

“We’re able now to move forward with this program and we can ensure sustainability and continue to provide those services to our members,” said Medicaid Director Michael Randol in an interview with The Gazette on Friday.

“The increased funding for Medicaid fits within the state’s expected revenue,” Reynolds said. “Iowa’s budget must reflect our priorities, and that’s what we’ve done by strengthening this program, while remaining committed to record-level support for schools, public safety and other programs.”

However, despite new provisions that department officials say will provide stronger oversight of the managed-care organizations and better protection of health care services, some lawmakers are doubtful it will address issues they see within the program.

“Taxpayers are being hurt because they must now pay an additional $342.2 million to out-of-state corporations that are running Medicaid and Iowa’s heath care system into the ground,” Senate Democratic Leader Janet Petersen said.

“ ... We all know for-profit Medicaid has been a disaster for Iowa families and health care providers. Now we know that it is a bigger disaster for the state budget and Iowa taxpayers.”

NEW COST, NEW PROVISIONS

The rate increases partially are based on additional data from the past two years on the “actual experience” of members in the program, including costs such as hospitalizations, medications, physician visits and more, Randol said.

Given the program has been in place since 2016, Medicaid officials have a better measure of member costs than they did when it was first privatized.

Provisions within the new contracts — which were created based on feedback from members, providers and other program stakeholders — are meant to address a number of concerns over the program, department officials said.

“Last session, the House passed Medicaid oversight legislation three times, so I am pleased to see that these measures have been included in the new contracts,” said Rep. Joel Fry, R-Osceola and chairman of the House Human Resources Committee.

The privatized Medicaid program, which offers care for poor and disabled Iowans, has received vocal criticism from members who claim their services were unfairly cut and from providers that say their insurance claims are not paid in a timely manner.

This year’s rate increase is “a reflection of looking at what wasn’t getting paid and should have been, and making sure that it’s built into the rates so it’ll get paid in the future,” DHS Director Jerry Foxhoven told The Gazette Friday.

In the new contract, insurers are required to decide on at least 95 percent of all “clean” provider claims within 30 days of receiving them.

Randol said providers had raised concerns relative to errors by the insurers, and officials wanted to ensure the language was “strong enough to hold the (managed-care organization) accountable” for the payments.

However, some believe this provision will not address the root problem. Sen. Liz Mathis, D-Hiawatha, said similar provisions existed in the first contract when Medicaid was privatized, but some providers still struggled to be paid on time and appropriately.

“They still have outstanding debt and bills from April 1, 2016. They still owe providers from that time,” Mathis said. “I am skeptical with this new provision if this will address the problem with paying providers’ claims.”

New provisions also centered on the longer-term services and supports population — the Medicaid members who are the most costly when it comes to health care expenses. Insurers are required to help members feel more a part of their service planning, and prohibits “arbitrary reductions in staffing for those who require individualized, enhanced staffing,” according to the contract summary.

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“We want to make sure that every plan of care and every service provided within those plans of care are appropriate,” Randol said. “We did not want the (managed-care) organizations to be able to just arbitrarily (cut staffing) without going through a process of evaluating the individual and going through the assessment and developing a plan of care with an interdisciplinary team.”

Foxhoven also attributed the payment increase to the expansion of mental health care services for adults across the state.

“Everyone recognizes this is going to cost more money,” Foxhoven said. “We designed that system to be sustained by Medicaid, so this is the first year that comprehensive mental health system comes into play as it starts getting built, so we had to build in money to pay for those services — services that didn’t exist in the past.”

Fred Hubbell, Democratic candidate for governor, released a statement Friday criticizing the new contracts. He has campaigned on the promise to return the program to state jurisdiction.

“By every measure, Gov. Reynolds’ privatization of Medicaid is a failure,” Hubbell said. “Iowa taxpayers are paying hundreds of millions more than promised, tens of thousands of Iowans have had their services denied or reduced, and providers across the state are being forced to close because of delays and denials in payment.”